Pete Owns a Shoe-Shine Business

question 108

Multiple Choice

Pete owns a shoe-shine business. Which of the following costs would be implicit costs?
(i) shoe polish
(ii) rent on the shoe stand
(iii) wages Pete could earn delivering newspapers
(iv) interest that Pete's money was earning before he spent his savings to set up the shoe-shine business

• A)(i) and (ii) only
• B)(iv) only
• C)(iii) and (iv) only
• D)(i), (ii), (iii), and (iv)

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Definitions:

Long-Run Supply Curve

A curve that shows the relationship between market prices and quantities supplied over a period when all production inputs are variable.

Mad Cow Disease

A neurological disorder in cattle that can be transmitted to humans, causing a fatal brain disease.

Economic Profits

Profits exceeding the opportunity costs of all resources used by a firm.

Industry Supply Curve

A graphical representation showing the total amount of a commodity that all producers in an industry are willing and able to supply at different prices.